CHINA is still a critical trading partner for many countries across the world, and the often-used narrative of the superpower being delinked from the global economy is overdone, says the Manila-headquartered Asian Development Bank.
'China's still probably the number one trading partner for the majority of countries in the world,' ADB's chief economist Albert Park told CNBC.
Although there have been parts of overall trade with China that have declined, the country's engagement and importance in the global value chain has not diminished, said Mr Park.
China's trade with its major partners fell in 2023 - its annual exports dipped for the first time in seven years as demand for Chinese goods fell amid slower global growth. However, the economic powerhouse remains a top trading partner to over 120 countries, and is still the largest trading partner to Japan, South Korea, Taiwan and Vietnam, according to US think tank Wilson Centre.
While it may ring true for certain goods or specific countries that are 'very aggressively trying to restrict Chinese trade', on a more global scale the delinking is much less evident, said the economist. He added that even following the trade conflict started by former US President Donald Trump in 2018, China's importance in the global value chain has not slumped.
The story of China being delinked from the global economy - I think those are probably generally very overdone or very partial.
Trade tensions between China and the US have been festering since 2018 with Trump slapping tariffs and other trade barriers on China. Even so, China continued to play an outsized role in the global economy, accounting for 18 per cent of global GDP and is regarded still as the world's largest trading economy.
'The story of China being delinked from the global economy - I think those are probably generally very overdone or very partial,' Mr Park continued.
On China's end, a pursuit of self-reliance has decreased its dependency on imports, but China continues to maintain its reliance on foreign demand, scaling up on exports which have become intertwined with the country's growth.
'All told, a delinking of global production processes and consumption from China is not in sight,' the US Federal Reserve said in a recent February statement.
As China's global trade links remain extensive, its stymied growth recovery story continues to pose a risk to Asia's trade environment, Mr Park noted.
'China remains an important demand side risk, because there's still a lot of questions about the resilience of Chinese growth,' he said. 'We often had a rule of thumb that 1 per cent slower growth in China reduced export demand by something like 0.3 per cent,' he said.
Other factors also present a headwind to Asia's trade ecosystem. Moderating global economic growth is expected to weigh on external demand for exports out of Asia, Mr Park surmised.
That said, he expects the semiconductor cycle to rebound, which may offer some hope for high tech exporters in Asia such as South Korea, Taiwan and Japan. Improved demand from the US and EU, and strong growth in India are also likely to benefit Asia's trade prospects, the adb said in its 2024 Asian Economic Integration Report.
Asian trade last year came in 'stagnant' and below 2022 levels as a result of global monetary policy, geopolitical tensions and a downturn in the semiconductor cycle, the ADB said.
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'China's still probably the number one trading partner for the majority of countries in the world,' ADB's chief economist Albert Park told CNBC.
Although there have been parts of overall trade with China that have declined, the country's engagement and importance in the global value chain has not diminished, said Mr Park.
China's trade with its major partners fell in 2023 - its annual exports dipped for the first time in seven years as demand for Chinese goods fell amid slower global growth. However, the economic powerhouse remains a top trading partner to over 120 countries, and is still the largest trading partner to Japan, South Korea, Taiwan and Vietnam, according to US think tank Wilson Centre.
While it may ring true for certain goods or specific countries that are 'very aggressively trying to restrict Chinese trade', on a more global scale the delinking is much less evident, said the economist. He added that even following the trade conflict started by former US President Donald Trump in 2018, China's importance in the global value chain has not slumped.
The story of China being delinked from the global economy - I think those are probably generally very overdone or very partial.
Trade tensions between China and the US have been festering since 2018 with Trump slapping tariffs and other trade barriers on China. Even so, China continued to play an outsized role in the global economy, accounting for 18 per cent of global GDP and is regarded still as the world's largest trading economy.
'The story of China being delinked from the global economy - I think those are probably generally very overdone or very partial,' Mr Park continued.
On China's end, a pursuit of self-reliance has decreased its dependency on imports, but China continues to maintain its reliance on foreign demand, scaling up on exports which have become intertwined with the country's growth.
'All told, a delinking of global production processes and consumption from China is not in sight,' the US Federal Reserve said in a recent February statement.
As China's global trade links remain extensive, its stymied growth recovery story continues to pose a risk to Asia's trade environment, Mr Park noted.
'China remains an important demand side risk, because there's still a lot of questions about the resilience of Chinese growth,' he said. 'We often had a rule of thumb that 1 per cent slower growth in China reduced export demand by something like 0.3 per cent,' he said.
Other factors also present a headwind to Asia's trade ecosystem. Moderating global economic growth is expected to weigh on external demand for exports out of Asia, Mr Park surmised.
That said, he expects the semiconductor cycle to rebound, which may offer some hope for high tech exporters in Asia such as South Korea, Taiwan and Japan. Improved demand from the US and EU, and strong growth in India are also likely to benefit Asia's trade prospects, the adb said in its 2024 Asian Economic Integration Report.
Asian trade last year came in 'stagnant' and below 2022 levels as a result of global monetary policy, geopolitical tensions and a downturn in the semiconductor cycle, the ADB said.
SeaNews Turkey